Investing in a Tax-Free Savings Account (TFSA) is one of the best ways to build long-term wealth. Since all gains and dividends earned in a TFSA are tax-free, the key to maximizing its benefits is to find high-quality stocks with strong growth potential to buy and hold for the long haul.
Therefore, instead of chasing risky stocks or trying to time the market, owning fundamentally strong businesses that can grow and compound over time is the best strategy.
So, if you’ve got $7,000 to put to work, here are four top-quality stocks to buy and hold forever in your TFSA.
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One of the best value stocks to buy in your TFSA
With Cargojet (TSX: CJT) trading right at the bottom of its 52-week range and more than 30% off its 52-week high, there’s no question it’s one of the best stocks to buy in your TFSA today.
Cargojet has long been one of the best growth stocks in Canada. Because it operates a critical logistics network, delivering time-sensitive packages for businesses across North America, it has been capitalizing on the increasing demand for overnight air cargo services as e-commerce sales have skyrocketed.
However, while demand for shipping has surged over the last decade, especially during the pandemic, Cargojet has faced headwinds as e-commerce growth has slowed and shipping volumes normalized. As a result, the stock has pulled back from its highs, creating an opportunity for long-term investors to buy it undervalued.
Despite near-term volatility, the long-term outlook remains strong. Cargojet has expanded its fleet and strengthened partnerships with major clients like Amazon, ensuring steady contract revenues.
Therefore, it’s no surprise that of the seven analysts covering Cargojet, six currently give it a buy rating, and its average analyst target price of $160.85 is a more than 60% premium to where it trades today.
Two top Canadian real estate stocks
In addition to a high-quality value stock like Cargojet, real estate stocks are also some of the best investments to buy in your TFSA due to the income they generate and long-term growth potential they offer.
So, if you’ve got cash that you’re looking to invest, two of the best stocks to buy now are CT REIT (TSX: CRT.UN) and Morguard North American Residential REIT (TSX: MRG.UN).
CT REIT owns a high-quality portfolio of retail properties, whose majority owner and primary tenant is Canadian Tire.
And because Canadian Tire is an essential retailer with one of the best-known brands in Canada, CT REIT is one of the most reliable real estate stocks you can buy.
In fact, since going public it has managed to increase its revenue and dividend every single year, including through the pandemic. Furthermore, it pays an attractive monthly dividend, with a current yield of roughly 6.2%, which is why it’s one of the best stocks to buy for generating tax-free income in your TFSA.
Morguard, on the other hand, owns a diversified portfolio of residential assets, including apartment buildings across Canada and the U.S., providing exposure to multiple real estate markets. Unlike investing in a single rental property, buying Morguard offers instant diversification across thousands of residential units.
One of the biggest advantages of residential REITs is their resiliency, especially during economic uncertainty. Housing demand remains strong, and rents tend to rise over time, allowing REITs like Morguard to generate consistent cash flow and steady dividend growth.
Furthermore, Morguard also pays a monthly dividend, and its current yield is upwards of 4.5%. So, if you’re looking for high-quality stocks to buy in your TFSA today, these two REITs are some of the best to consider.
One of the best growth stocks to buy in your TFSA
Another strategy to take advantage of the tax-free nature of your TFSA is to buy high-potential growth stocks like WELL Health Technologies (TSX: WELL).
WELL is a healthcare technology stock that’s grown rapidly through acquisitions and has quickly become the largest owner/operator of outpatient clinics in Canada.
In fact, the more it acquires these clinics, the better it scales its costs and the more profitable its business becomes.
Therefore, while you can still buy WELL at a reasonable valuation, it’s certainly one of the best stocks to buy now. Because over the next few years its earnings are expected to skyrocket, and there’s no question that its share price should follow suit.
